Research On Trading Strategy Of Chinese Stock Market Based On The Technical Analysis

In recent years, Chinese stock market has experienced rapid development. The quantity of investment community who involved in the market experience explosive growth. All these new changes make stock maket play a much more important role in the economic development. The role of Stock market as economic barometer appears to be gradually strengthened. But these good changes are not reflected in the investment income of individual investors. View from the practical experience, the return of investment in the individual investors'trading is very low. Many individual investors can't make money from the stock market, in fact they keep lossing money for a very long time.Because of this, selecting Shanghai stock market as sample to study technical analysis method and trading strategies. Firstly, the article present the role of technical analysis in the securities analysis method and the three basic assumptions. Then analysing and generalizing the important technical analysis method and using these methods to analyse the shanghai stock market. The article also combine mathematics test and charting test to test the application effect and success rate of the methods. We also use ADF test, Johansen cointegration test and Granger causality test to analyse the relationship between volume and stock price. Using comparative analysis method to summarize and assess all kinds of technical analysis, investigating mutual authentication and complementary capabilities and summarizing the discipline of the index.The research express that index is now in wave [c] of the wave II, right triangle appears frequently in the history. Quantitative analysis results show that Equilibrium relationship exist between price and volume and price Granger Cause volume. The system test result shows that the profitability of moving average trading system is better than the profitability of MACD and the profitability of KDJ, effectiveness of these three index is in the order of decreasing. When forecasting the tarket position of the stock index, the combination between the amplitude of wave 1 and ratio 1.618, the combination between the amplitude of the first 3 waves and ratio 0.618, correction ratio 38% and 62%, all these four methods have a very high success rate. Time cycle researth demonstrate that January, April, May and June is the most likely reverse month. The time range of 18-21 days,28-31 days,57-65 days is the most likely reverse days.Through integrating different kinds of technical analysis, the article put forward three trading strategies including trend trading, deviate trading and breakthrough trading. When analysing and forecasting the trend of the stock market to decide when and where to trade, these trading strategies can consider more about the influence of different technical factor, shielding false signals to increase profitability of the trading.